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London Forex Report: Draghi Sends Euro Higher

London Forex Report

The ECB reduced the deposit rate by 10bps to -0.3%, while maintaining the main refinancing rate at 0.05%. In the press conference that followed, ECB President Draghi announced that current QE programme will be extended to Mar 2017 from Sept 2016 but size of QE will be maintained at €60b per month. He said that the central bank expects the economy to grow 1.5% this year, before accelerating to 1.6% and subsequently 1.7% in 2016 and 2017 respectively.

Fundamental: EUR traded its biggest one-day surge in nearly seven years as the policy easing by the ECB missed investors’ wide expectations.EURUSD last traded at 1.0938 after the previous gain of 3.1 percent, its biggest gain since March 2009. It had been as low as 1.0538 which was a level not seen since April. ECB extended its QE programme by six month to March 2017 but the strength of easing remain unchanged

Technical: While 1.09 caps intraday upside corrections, bears target a test of 1.05 next ahead of an assault on year to date lows. A close above 1.10 resets bullish ambitions.

Fundamental: GBP pushed higher above 1.51 handle as the greenback faced a wave of selling across the board, weighed by a steep EURUSD rally and slightly disappointing US jobless claims data. UK’s services PMI in November has surprised markets to the upside, rising to 55.9 vs. 55.0 initially estimated and up from October’s 54.9

Fundamental: USD Index was on track for its biggest daily percentage loss since March 2009, and dropped 2.25 percent at 97.734. USDJPY hit 122.30s, its weakest level against the JPY in over a week.The whole market is patient for the US non-farm payroll due today as this data is directly linked to the possibility for Fed rate hike .

Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 122 opens a test of 121.40 support next ahead of pivotal 120.

Fundamental: AUD came off multi-week peaks after hawkish-sounding comments from the head of the Federal Reserve underlined the case for an interest rate hike this month and injured appetite for risk assets. The Australian dollar remained within reach of a seven-week high of 0.7361 undermined by the figures showing Australia’s trade deficit widened to $3.3 billion AUD, versus forecasts of $2.6 billion AUD, due in part to weaker commodity prices.

Technical: While .7170/50 remains the bid zone expect grind higher to test .7350 area next, only a close below .7150 concerns near term bullish bias.

Fundamental: CAD firmed against the USD, helped by a rebound in crude oil prices. Crude prices rallied ahead of an OPEC meeting today as investors hedged their positions in case of a surprise outcome, inducing the volatility in the Canadian dollar.

Technical: Bulls have the ball while 1.3280/60 supports intraday downside. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped ‘gambling’ and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.

Daily Set Up: #EURAUD Trading The Channel https://t.co/u9Kwfc3r7K Update #EURAUD short from 1.5565; stop loss moved to breakeven